There are currently no items in your cart
Q&A with Adyen: Keeping Up with the Times
In the wake of the changing digital shopping sector, customer’s habits are changing rapidly. Michel van Aalten, Country Manager ANZ at Adyen, specifies how these changes can affect retailers, and how to keep up with the times.
Negative shopping experiences have an impact of $71bn on Australian retailers. Could you please explain what is involved in a ‘negative shopping experience’?
The figure pertains to potential sales that are abandoned due to a poor shopping experience. It’s not to say this money is gone forever, but it means the shopper has given up on the purchase with that retailer, taking their spend to another competitor or potentially an international retailer. The reason for this is due to friction in the shopper journey, which dissatisfies shoppers and negatively impacts loyalty. The culprit is often a discontinuity between sales channels, which results in information and process siloes that restrict customers from receiving the personalised, fluid experience they’ve come to expect. What this ends up looking like is not being able to offer preferred payment options in-store, meaning customers don’t have access to the host of different payment methods they’ve grown to expect. Long queues in-store is another pain point causing shoppers to abandon purchases. Other adverse experiences include out-of-stocks, the result of having very distinct separations between the online store and physical store when customers are unable to walk out of the store with an item they want, instead of paying for the out-of-stock item and having it shipped to their home.
Customer experience is one of the most crucial factors for shopping. Could you provide a single way retailers can provide a better experience for its customers both online and in-store?
The model for combining online and in-store channels is called unified commerce, a model that leading retailers are already using effectively to provide optimal customer experiences that accommodate the entire shopping journey. It’s important businesses think from the shopper’s viewpoint by managing every single customer touchpoint under a single unified platform. Unified commerce accounts for all modern customer journeys. As an example, through click and collect a customer can buy online and pick-up the item in-store, or a customer can buy an online item in-store and have the product shipped to their home.
What’s the most prevalent reason why customers have a negative experience when shopping?
Negative shopping experiences revolve around growing consumer expectations of immediacy and convenience. Consumers expect to be able to purchase what they want, when they want, and how they want, whether in-store or online. Technology has advanced in such a way that consumers can complete the entire path to purchase in-store in a few minutes and in some instances, completely independent of a store worker. The choice to purchase is increasingly being defined by convenience and speed. Modern shoppers demand immediacy and will ditch a purchase altogether if they’re being told to wait. The 451 Research commissioned by Adyen demonstrates this through a shopper’s dislike of long queues, revealing that 61 per cent of Australian shoppers said they would abandon an in-store purchase due to excessive lines, which results in $13bn in abandoned sales annually. Unsurprisingly, the group who identified with this sentiment the most are Gen Y, a group who have grown up with the convenience of technology at their fingertips. It is a generation of connected consumers who will simply take their purchase to a competitor on their phone rather than find themselves excessively waiting.
Retailers are expecting that one-third of sales will be made online by 2022. With the negative reactions to shopping in-store, how will it affect the way Aussie shop online?
One of the learnings from the 451 Research commissioned by Adyen is that Australia has the largest percentage of consumers who prefer bricks and mortar shopping (50 per cent), eclipsing the US (37 per cent) and the UK (36 per cent) by a significant margin. Despite the rise of online shopping, the Aussie shopper is still very passionate about shopping in-store. Some of the reasons for this is the desire to physically try the product (56 per cent) as well as the instant gratification of walking away with the product in hand (56 per cent). The real consideration, however, is creating cross-channel shopping experiences for both in-store and online. Retailers have to stop separating the two and view both as one customer experience. One where a shopper has the ability to purchase online and return in-store, or pick-up in-store from a mobile order.
Buy Now Pay Later services such as Afterpay and Zip have taken Australia by storm. Despite many stores offering the payment platform in-store and online, do you think that those who don’t may play a role in the dissatisfaction with retail?
The popularity of the buy-now-pay-later model in Australia is unsurprising, given the insights we have about the Aussie shopper and their expectation of quick and painless purchases. It all points to convenience and the power of immediacy. Consumers are saying, “I might not have the full amount to purchase this good, but I want to walk away with it today. How can you accommodate?”
Those who don’t offer these services could find themselves losing potential sales. Our research has pinpointed how crucial offering the preferred payment method is. In the past six months, 44 per cent of shoppers has been unable to use their preferred payment method with a retailer in-store, prompting them to abandon their purchase entirely, resulting in $6bn in abandoned sales annually.
These are some confronting facts and figures. What do these findings mean for the future of Australian retail?
The research reveals that Aussies are evidently being hindered by poor in-store experiences. This presents a strong opportunity for retailers to cash in by cleaning up some of their hygiene factors and offering better customer experiences, including contactless payments, self-service options and omnichannel experiences. The results aren’t intended to instil gloom, but to highlight the costly reality, because ultimately this is an opportunity for Australian retailers to capitalise on. Australian retailers need to create positive shopping experiences—which amount to $21bn in sales lift annually—and address negative shopping experiences—which amount to $71bn in abandoned sales annually.
With personalised shopping services like ‘smart’ mirrors, in-app customisation and automated payment services entering the retail scene, it seems that the future is now. Is there any opportunity for Australian retailers to drive a positive shopping experience with the emerging tech?
Going digital is key. While new shopping channels have traditionally taken years—if not decades—to develop, consumers today are increasingly digitally savvy and are eager to leverage the full arsenal of tools developing around them. Just under half of the shoppers we surveyed (46 per cent) described digital technology as essential to their daily lifestyle, so tapping into the power of emerging technologies like self-service kiosks, smart mirrors or chatbots are critical for retailers.
We can look at brands like Dominos and 7-Eleven, who have both begun trialling a new ‘tap and take’ concept store which ditches cash in-store and trials exclusively electronic payments to speed up in-store queues and wait times. Or IKEA’s new concept store in Manly which is a planning studio over a traditional outlet, almost completely unmanned and unstocked, it is a place for prospective customers to plan their dream home digitally and have items shipped to them. These are blueprints for a future model of retail. The ability to add emerging technologies in-store will be one of the biggest catalysts in driving positive shopping experiences going forward.
Customer expectations change with every new tech platform that enters the scene. How can retailers adapt and work with developing customer expectations, so they don’t get left behind?
The connected customer is at the centre of all change in retail. Today, 91 per cent of Australian consumers own a smartphone, and according to 451 Research, mobile is set to eclipse desktop in terms of transaction volume for the first time this year. Other connected devices are also setting the stage for change in e-commerce, with one in four consumers now owning a smart speaker and opting to shop regularly with these. It’s important for retailers to keep their ear to the ground and have the platforms in place to be elastic with bringing in new technology when required. Yet, it is troubling that digital transformation in Australia continues to be in its infancy, with just 22 per cent of retailers having a formal strategy in place. Retailers must assess the viability of their legacy systems and partner ecosystem to ensure they do not throttle the pace of innovation and adaptation but are instead in a position to benefit from it. Look for partners like Adyen who are future-proofed and can meet the everchanging needs of the retailers as they evolve.
Like this story? Sign-up for the free Pulse Weekly Newsletter for more essential online retail content.